Peter Edwards | Making environmental levies work for people and nature

Jamaica’s exposure to climate change is no longer a distant warning. Flooding, drought, coastal erosion and declining reefs are already undermining livelihoods, public health and economic stability.

Sudden climate shocks like Hurricane Melissa being a recent example. Against this reality, the Government’s proposal in the 2026/27 Budget to increase the Environmental Protection Levy (EPL) from 0.5 per cent to 0.8 per cent and to expand its domestic base deserves careful attention.

Environmental levies can be powerful policy tools. When designed well, they discourage harmful activities, raise predictable revenue and finance investments that strengthen resilience. When designed poorly, they become little more than another tax, disconnected from the environmental problems they are meant to solve.

This distinction matters.

The Jamaica Information Service reported that the proposed increases to the EPL will be applied mainly to imports and locally manufactured goods and appear to be grouped alongside taxes on sweetened beverages and cigarettes. Yet many of Jamaica’s most severe environmental impacts originate elsewhere.

Mining operations generate dust that affect nearby communities. River sand mining and poorly planned coastal development impact communities and affect our beaches – and by extension tourism product. While untreated wastewater and plastic pollution continue to degrade rivers and reefs, and industrial overfishing threatens food security and livelihoods.

These industrial activities impose real costs on the public even as they directly benefit from Jamaica’s natural assets. If environmental protection is the goal, then fairness demands that other industrial sectors generating environmental harm – or negative externalities – also contribute meaningfully to addressing it.

TRANSPARENT REVENUE ALLOCATION

Equally important is what happens after the revenue is collected. One of the persistent weaknesses of environmental levies in Jamaica and across the world is that funds often flow directly into respective Consolidated Funds, with no clear link to environmental protection, public health or community support. This undermines public trust and weakens the effectiveness of the policy.

Evidence consistently shows that people are more willing to pay environmental taxes when they can see how the money is used. My own PhD research, which was 17 years ago, showed that tourists who visit Jamaica support levies when revenues are transparently earmarked for conservation. The same is true for members of the public and businesses who would support the use of a portion of taxes for pollution control, climate adaptation and community resilience. Transparency is not a technical detail–it is the foundation of legitimacy.

ADDRESS MISAPPLIED SUBSIDIES

Specifically, regarding tourism taxes, Jamaica must confront the contradiction of continuing subsidies and incentives that encourage environmental degradation, particularly along the coast. Misapplied subsidies can weaken the very tourism product on which the economy depends. I have previously argued that redirecting existing hotel tax credits toward ecosystem restoration and nature-based solutions would generate far greater long-term returns (Economic, social impact of tourism, Sunday Gleaner, January 4, 2009 & No to tourism tax, yes to environmental tax, Sunday Gleaner, Dec 19, 2010). Perhaps this underlies the government’s decision to increase the GCT rate on tourism taxes. Similar subsidies for river and other sand mining should also be examined.

EARMARK REVENUES FOR ENVIRONMENT AND HEALTH

Dedicating a defined share of these special tax revenues to agencies responsible for protecting watersheds, reefs, forests and coastlines would be a practical first step. So too would directing funds toward communities bearing the heaviest environmental burdens, whether through health services, environmental monitoring or remediation.

Environmental levies are not anti-growth. They are pro-resilience. Healthy reefs protect beaches, support fisheries and tourism. Well-managed landscapes reduce disaster costs and safeguard freshwater supplies. Investing in nature is not a luxury, it is economic common sense.

Any discussion of environmental taxes (including increasing the EPL) is an opportunity to get this right. But success will depend on two simple principles: transparency in how revenues are used, and fairness in who pays. If regular Jamaicans are asked to contribute more, they deserve confidence that the funds will be reinvested in protecting the environment–and benefit Jamaican people – on which the country’s future depends.

Dr Peter Edwards is a Jamaican marine scientist and environmental economist. He is a member of the Jamaica Institute of Environmental Professionals and serves as the sector lead for Environment on the Global Jamaica Diaspora Council. Send feedback to columns@gleanerjm.com